Ukraine hopes to get $1.5 billion tranche from IMF in June (updated)

Ukraine hopes to get a $1.5 billion tranche of a loan from the International Monetary Fund (IMF) in June 2011 after a fund mission visits Kyiv from May 10 to May 20, Director of the Department for Public Debt Management and International Cooperation at the Ukrainian Finance Ministry Serhiy Makatsariya has said.
"We expect the mission to work from May 10 to May 20… After that, the next tranche could be allocated in June," he said at a press conference on Tuesday.

He said that the funds of the next tranche from the IMF would be sent to the National Bank of Ukraine.

Makatsariya noted that discussions with IMF experts, particularly with respect to pension reform, were continuing and that the date for the launch of pension reform had been shifted.

"We should have taken all decisions on pension reform by April 15. Currently we haven't fulfilled this requirement. In May, we will discuss [the timing of pension reform]," he said.

He also stressed the importance of maintaining cooperation with the IMF, since it influences the country's interaction with other international financial institutions and private investors.

Makatsariya noted that the receipt by Ukraine of EUR 690 million from the European Union in 2011-2013, as well as the attraction of $850 million from the World Bank in 2011 for the state budget, depended on cooperation with the IMF.

He said that IMF funds were provided at low interest rates, with a standard interest rate for IMF loans being up to 2% per annum.

He said that since last summer, Ukraine had cooperated with the IMF under a new Stand-By Arrangement with the total funding of about $15.1 billion, of which the country has already received $3.4 billion.

He said that it would be necessary to allocate around Hr 48 billion from the state budget in 2012-2015 to repay the IMF loan.

Peak payments on the country's public debt (foreign and domestic) will fall in the current year, with Hr 89 billion to be allocated from the state budget for these purposes, Makatsariya said.

He also said that while ensuring GDP growth at 7-10% annually over the next three years, Ukraine could opt not to take IMF loans, while extending cooperation with the fund in areas other than credits.

"Under the normal macroeconomic situation, when there is no need to attract external resources to finance the budget deficit, cooperation without fundraising is also normal," he said.

He also said that Ukraine was able to properly pay its debts and that the probability of the country's sovereign default was zero.

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